PROXY STATEMENT
SOLICITATION, VOTING AND REVOCABILITY OF PROXY
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Timberline Bancshares, Inc. ("Bancshares") for use at the 1999 Annual Meeting of
Shareholders ("Annual Meeting") to be held on May 13, 1999. Only shareholders
of record on March 15, 1999 will be entitled to vote at the meeting. There
were 1,006,810 shares of Bancshares Common Stock ("Common Stock") issued and
outstanding on that date.
The principal executive offices of Timberline Bancshares, Inc. and its
subsidiary, Timberline Community Bank (collectively, the "Company") are located
at 123 N. Main Street, Yreka, California 96097. The approximate date on which
this Proxy Statement and the accompanying Proxy are being sent to shareholders
is April 9, 1999.
Voting
The presence, in person and by proxy, of a majority in number of the outstanding
shares of Common Stock entitled to vote at this Annual Meeting shall constitute
a quorum for the transaction of business.
The approval of Proposal 1 (the election of Directors) normally requires the
affirmative vote of a majority of shares of Common Stock present and voting,
with each shareholder entitled to one vote per share of Common Stock owned.
However, in certain circumstances, the election of directors may be subject to
cumulative voting. Cumulative voting entitles each shareholder to as many votes
as is equal to the number of directors to be elected, multiplied by the number
of shares owned by such shareholder. Under cumulative voting, each shareholder
may distribute his or her votes between one or more nominees as he or she sees
fit. Shares of common stock owned by each shareholder are entitled to be voted
cumulatively if any shareholder present at the Annual Meeting has given notice
at the Annual Meeting prior to the voting of his or her shares, of his or her
intention to vote his or her shares cumulatively. If any shareholder has given
such notice, all shareholders may cumulate their votes for candidates in
nomination. In the election of directors, the seven (7) candidates receiving
the highest number of votes will be elected. Discretionary authority to
cumulate votes is hereby solicited by the Board of Directors.
The approval of Proposal 2 (the ratification of appointment of accountants)
require the affirmative vote of a majority of shares of Common Stock present and
voting. Each shareholder is entitled to one vote for each share of Common Stock
held by him or her when voting on Proposal 2. There is no cumulative voting
permitted with respect to Proposal 2.
Revocability of Proxies
Shareholders who give a proxy may revoke it at any time prior to exercise by
filing a written request with Bancshares' Secretary, by voting in person, or by
presenting a duly executed proxy bearing a later date.
Solicitation
Solicitation of proxies will be by mail and the entire cost of preparing,
assembling, printing and mailing this Proxy Statement, the accompanying Proxy
and all other items pertaining thereto will be borne by the Company.
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INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Boards of Timberline Bancshares, Inc. and its sole subsidiary, Timberline
Community Bank ("Bank") are comprised of the same persons.
During 1998, the Bank's Board of Directors held 11 regular meetings. All Bank
directors attended at least 75% of the regular meetings of the Bank's Board of
Directors and Board committee meetings. The Bancshares Board of Directors held
five meetings. All directors attended at least 75% of the meetings.
During 1998, Bank Directors (other than the Secretary of the Bank) who were not
otherwise employed by the Bank received a monthly payment of $400.00. The
Secretary of the Bank received a payment of $600.00 per month. The aggregate
amount of Directors' fees paid in 1998 by the Bank was $28,400. It is
anticipated that the compensation for non-employee Directors will remain the
same during 1999.
During 1998, Bancshares and the Bank's Boards of Directors had several standing
committees, including an Audit Committee and a Personnel Committee. There was
no standing nominating committee; however, the procedures for nominating
directors, other than nomination by the Board of Directors itself, are set
forth in the Bylaws and in this Proxy Statement (see Section of "Proposals of
Shareholders").
The functions, composition and frequency of meetings for the Audit and Personnel
Committees in 1998 were as follows:
Audit Committee - The Audit Committee was composed of Richard S. Day, Chairman;
Don L. Hilton, and Elmo Smith. The Committee provides general oversight of the
internal audit function, reviews the findings of external audits and
examinations, evaluates the adequacy of insurance coverages, and reviews the
activities of the compliance committee. During 1998 two (2) meetings were held.
Personnel Committee - The Personnel Committee was composed of Don L. Hilton,
Chairman; Robert E Banning, Vice-Chairman; and the full complement of the
Board. The Personnel committee conducts an annual review of various
compensation issues, including salary budgets, compensation plans and personnel
policy. During 1998 two (2) meetings were held.
ELECTION OF DIRECTORS
(PROPOSAL 1)
At the 1999 Annual Meeting of Shareholders, seven (7) directors are being
considered for election, each to hold office for a one year term and thereafter
until his or her successor has been elected and qualified. The Board's
nominees are shown below along with biographical summaries and beneficial
ownership of Bancshares' Common Stock. The information is presented as of March
1, 1999.
All director nominees are currently serving as directors. No director nominee
listed below holds any other directorships in a company with a class of
securities registered pursuant to Section 12 of the Exchange Act.
In the event a nominee declines or is unable to serve as a director, which is
not anticipated, the shares represented by proxy will be voted for the Board's
substitute nominee.
Bancshares' Board of Directors knows of no person who beneficially owns more
than 5% of the outstanding Common Stock of Bancshares as of March 1, 1999, with
the exception of director nominees Gareld J. Collins, Norman E. Fiock, Don L.
Hilton and Robert J. Youngs, and Director Emeritus, Charles J. Cooley, who owns
beneficially 63,244 or 6.28%.
The beneficial ownership of Bancshares Common Stock by such individuals is shown
in the chart listing director nominees.
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Unless otherwise indicated, each director has sole investment and voting power
(or shares such power with his or her spouse) with regard to the shares set
forth in the following table. The source of the information provided in the
table is Bancshares' records.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE DIRECTOR
NOMINEES SHOWN IN THE FOLLOWING TABLE BE ELECTED AS
DIRECTORS OF TIMBERLINE BANCSHARES, INC.
NOMINEE, AGE AND YEAR PRINCIPAL OCCUPATION SHARES OF COMMON STOCK
FIRST BECAME DIRECTOR DURING PAST FIVE YEARS BENEFICIALLY OWNED ON
March 1, 1999
STEPHEN P. BRADLEY President, Shasta Forest 6,320 indirect(1) .63%
Age 61 Products
Elected (Bank) 1999
Elected (Bancshares) 1999
GARELD J. COLLINS General Partner, 73,866 indirect 7.34%
Age 85 Enterprise Investments (2)(6)
Elected (Bank) 1979
Elected (Bancshares) 1991
RICHARD S. DAY (5) Secretary, Timberline 12,800 direct 2.26%
Age 81 Bancshares, Inc., Timberline 10,000 indirect
Elected (Bank) 1979 Community Bank; Retired (6)
Elected (Bancshares) 1991 Business Executive
NORMAN E. FIOCK Chairman of the Board, 95,024 indirect 9.43%
Age 74 Timberline Bancshares, Inc. (3)(6)
Elected (Bank) 1979 and Timberline Community Bank
Elected (Bancshares) 1991 Retired cattle rancher and farmer
DON L. HILTON President, Don Hilton 84,146 indirect 8.36%
Age 62 Enterprises and Shasta (4)(6)
Elected (Bank) 1981 Holiday, Inc., Mt. Shasta, Ca.
Elected (Bancshares) 1991
JOHN A LINTON Executive Vice President, 500 direct 1.04%
Age 58 Timberline Community Bank 10,000 indirect
Elected (Bank) 1998 (6)
Elected (Bancshares) 1998
ROBERT J. YOUNGS President and Chief Executive 71,364 direct 8.08%
Age 64 Officer,Timberline 10,000 indirect
Elected (Bank) 1983 Bancshares,Inc. and (6)
Elected (Bancshares) 1991 Timberline Community Bank
9 DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (7) 388,162 direct 38.55%*
and indirect
* percentage includes both direct and indirect beneficial ownership.
(1) Includes 2808 shares held by Stephen P. Bradley and Barbara R. Bradley Trust
of which Mr. Bradley is trustee and 3512 shares held by the Shasta Forest
Products, Inc. Profit Sharing Fund of which Mr. Bradley is trustee.
(2) Includes 63,866 shares held by the Gareld J. and V. June Collins Trust, of
which Mr. Collins is trustee.
(3) Includes 76,974 shares held by the Norman E. and Mayme E. Fiock Trust, of
which Mr. Fiock is trustee, and 8,050 shares held by Mr. Fiock's wife.
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(4) Includes 72,646 shares held in revocable trusts of which Mr. Hilton is
trustee and 1,500 shares held by Don Hilton in trust for Mr. Hilton's two
grandchildren.
(5) Mr. Day assumed the position of Bank Secretary on June 8, 1988, and
Bancshares Secretary on May 9, 1991.
(6) Incldes Bancshares Common Stock subject to Options under Bancshares Stock
Option Plan. (See later Section entitled "Stock Option Plan").
(7) Includes the 5 directors and 2 Executive Officers listed in the chart along
with two other Executive Officers.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THESE NOMINEES
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes the remuneration earned in 1998 by each Executive
Officer of Bancshares and the Bank whose total remuneration exceeded $60,000,
and by all Executive Officers of Bancshares and the
Bank as a group.
Cash and Cash Equivalent Forms of Remuneration
Name of Individual Capacities Salaries, Fees Securities Aggregate of
or Number of In Which Directors Fees, or Property Contingent
Persons in Group Served Commissions and Insurance, Forms of
Bonuses Benefits or Remuneration
Reimbursements,
Personal
Benefits
Robert J. Youngs President & $159,000. (1) $0
Chief Executive
of Bank &
Bancshares
John A. Linton Executive Vice $66,900.
Pres. of Bank
Roger B. Ebert Senior Vice $ 75,200.
President & Loan
Administrator, Bank
Helen L. Gaulden Senior Vice $66,900.
President, Cashier
& Treasurer of Bank
& Bancshares
Executive Officers Officers $368,600.
as a group
Notes: (1) The Bank has paid and plans to continue to pay premiums on certain
life insurance policy coverage for Bancshares and Bank Executive Officers in
excess of that normally provided Bank employees. It is the opinion of
Bancshares' Board of Directors that the total personal benefit paid to any
Executive Officer of Bancshares or the Bank during the year was less than
$5,000.
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COMPENSATION PURSUANT TO PLANS
The Bank initiated, in the first quarter of 1994, a Salary Continuation Plan for
its three executive officers. A Salary Continuation Plan (SCP) is a non-
qualified, executive benefit plan in which the bank agrees to pay the executive
additional benefits in the future, usually at retirement. Because the SCP is a
non-qualified plan, the bank can selectively reward certain key executives
without regard to the non-discrimination requirements of qualified plans.
The SCP is embodied in a written agreement between the bank and the executive(s)
selected to participate in the Plan. The SCP is an unfunded plan, which means
that the executive has no rights under the agreement beyond those of a general
creditor of the bank, and there are no specific assets set aside by the bank in
connection with the establishment of the Plan. The accounting rules concerning
the Plan require that the bank accrue sufficient expenses so that the present
value of the benefits to be paid to the executive at retirement is reflected as
a liability on the bank's books by the time of retirement. The SCP typically
provides that, if the covered executive dies prior to or during retirement, the
bank will pay the benefits set forth in the agreement to the deceased
executive's beneficiary or estate.
The Plan is informally linked with a single premium universal life insurance
policy, which is purchased by the bank in connection with its implementation.
The executive is the insured under the policy, but the bank is the
owner and the beneficiary of the policy. The executive has no claim on the
insurance policy, its cash value or the proceeds thereof. The cash surrender
value of the single premium insurance policy(ies) is carried on the bank's books
in "other assets" consistent with generally accepted accounting principles.
During the pre-retirement period, there are no tax consequences to the covered
executive with respect to the Plan agreement and there are no tax deductions to
the bank in connection with the Plan. The cash value of the insurance policy
increases through interest credited by the insurance company. The increase in
the insurance cash value is not taxable income. After retirement, the benefit
payments to the executive are taxable income and are tax-deductible expenses to
the bank as they are paid. If the executive were to die, either prior to or
during retirement, the bank will receive the insurance proceeds from the policy
tax free, except for possible alternative minimum taxes, and the payments made
by the bank to the executive's beneficiary will be tax deductible expenses to
the bank. Since the present value of the bank's obligation to the executive has
been booked as of the retirement date, the impact on the bank's income statement
after retirement is minimal.
The Plan was established as follows:
ANNUAL DURATION
RETIREMENT RETIREMENT OF RETIREMENT
NAME AGE BENEFIT BENEFIT
Robert J. Youngs, 65 $48,000.00 10 Years
President & CEO
Roger B. Ebert 65 $24,000.00 10 Years
Sr. Vice President &
Loan Administrator
Helen L. Gaulden 65 $20,000.00 10 Years
Sr. Vice President &
Cashier
Payment schedules will be selected by the covered employees at retirement. No
amounts have been paid or distributed under the plan during the last fiscal
year. Amounts in the plan have not been included in the previous cash
compensation table.
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Amounts accrued pursuant to the plan for the accounts of the named individuals
and group during the last fiscal year are as follows:
Robert J. Youngs $68,439.
Roger B. Ebert 61,975.
Helen L. Gaulden 29,596.
Total as a Group $160,010.
In the first quarter of 1994, the Bank initiated a 401(K) plan in which all
employees can participate. The 401(K) is a qualified plan. Employees may elect
to deposit up to 15% of gross wages in the plan and the Bank contributes an
additional 10% of the employees' election.
STOCK OPTION PLAN
The Bank maintained an Incentive and Non-qualified Stock Option Plan ("Plan")
which was originally adopted by the Board of Directors of the Bank on February
12, 1998, and which was duly approved by shareholders of the Bank on May 14,
1998.
Summary of the Plan
The Plan will be administered by the Board of Directors. All options under the
Plan will be granted at an exercise price of not less than 100 percent of the
fair market value of the shares of Common Stock on the date of grant, except for
an incentive stock option granted to an optionee who at the time of the grant
owns more than 10% of the total combined voting power of all classes of stock of
the Company or a subsidiary of the Company in which case the option price shall
not be less than 110% of the fair market value of such stock. The purchase
price of any shares purchased upon exercise is payable in full in cash or,
subject to applicable law, with Common Stock previously acquired by the optionee
and held by the optionee for a period of at least six months. The equivalent
dollar value of shares used to effect a purchase shall be the fair market value
of the Common Stock on the date of exercise.
Options granted pursuant to the Plan shall be for a term of up to ten (10)
years, except for certain incentive stock options. Each option shall be
exercisable in installments and upon such conditions as the Board of Directors
shall determine. Options granted shall vest over a period no greater than five
years, and no less than 20% of such option shall vest annually. Optionees shall
have the right to exercise all or a portion of the option at any time or from
time to time with respect to the vested part of their stock options. If any
option shall expire without being exercised in full, the shares will again
become available for granting of stock options under the Plan. The Plan shall
expire on February 12, 2008.
Incentive stock options may be granted to full-time salaried officers and
management level employees of the Company or a subsidiary. No director who is
not also a full-time salaried officer or management level employee may be
granted an incentive stock option pursuant to the Plan. No incentive stock
option with a term of more than five (5) years may be granted to any person who
at the time of grant owns stock possessing more than 10% of the total combined
voting power or value of all classes of stock of the Company or a subsidiary of
the Company. Non-qualified stock options may be granted to directors, full-time
salaried officers and management level employees of the Company or its
subsidiaries.
Incentive Stock Options. If the optionee is employed by the Company (or a
subsidiary) continuously from the date of grant until at least three months
before the option is exercised and otherwise satisfies the requirements
of the Plan and applicable law, the optionee will not recognize taxable income
upon the exercise of the option. If the optionee is not employed by the Company
(or a subsidiary) continuously from the date of grant until at least three
months before the option is exercised for reason other than death or disability,
the optionee will recognize ordinary income at the time the option is exercised.
The Company will be allowed a deduction for federal income tax purposes only if
and to the extent that the optionee recognizes ordinary income. Upon exercise
of an incentive stock option, the excess of the fair market value of the shares
received over the option price at the time of exercise is treated as an item of
tax preference which may result in the imposition of the alternative minimum
tax.
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On a subsequent sale of shares acquired by the exercise of an incentive stock
option, gain or loss will be recognized in an amount equal to the difference
between the amount realized on the sale and the optionee's tax basis of the
shares sold. If a disposition (generally a sale, exchange, gift or similar
lifetime transfer of legal title) of stock received pursuant to an incentive
stock option does not take place until more than two years after the grant of
such option and more than one year after the exercise of such option, any gain
or loss realized on such disposition will be treated as long-term capital gain
or loss. Under such circumstances, the Company will not be entitled to a
deduction for income tax purposes in connection with the exercise of the option.
If a disposition of stock received pursuant to an exercise of an incentive stock
option occurs within two years after the grant of such option or one year after
the exercise of such option, the optionee must treat any gain realized as
ordinary income to the extent of the lesser of (i) the fair market value of such
stock as of the date of exercise less the option price, or (ii) the amount
realized on disposition of the stock less the option price. Such ordinary
income realized is deductible by the Company for federal income tax purposes.
Any additional amount realized on the disposition will be taxable as either
long-term or short-term capital gain, depending on the holding period.
Non-qualified Stock Options. In general, when an optionee exercises a non-
qualified stock option, the optionee recognizes ordinary income in the amount of
the excess of the fair market value of the shares received upon exercise over
the aggregate amount paid for those shares, and the Company may deduct as an
expense the amount of income so recognized by the optionee. For capital gains
purposes, the holding period of the shares begins upon the exercise of the
option, and the optionee's basis in the shares is equal to the fair market value
of the shares on the date of exercise.
If, upon exercise of a non-qualified option, the optionee pays all or part of
the purchase price by delivering to the Company shares of already-owned stock,
there are no federal income tax consequences to the optionee or the Company to
the extent of the number of shares so delivered. As to any additional shares
issued, the optionee recognizes ordinary income equal to the aggregate fair
market value of the additional shares received, less any cash paid to the
Company, and the Company is allowed to deduct as an expense the amount of such
income.
For purposes of calculating tax upon disposition of the shares acquired, the
holding period and basis of the new shares, to the extent of the number of old
shares delivered, is the same as for those old shares. The holding period for
the additional shares begins on the date the option is exercised, and the basis
in those additional shares is equal to the taxable income recognized by the
optionee, plus the amount of any cash paid to the Company.
Upon a subsequent disposition of the shares received on exercise, the difference
between the amount realized on such disposition and the fair market value of the
shares on the date of exercise generally will be treated as a separate capital
gain or loss.
Other Terms and Conditions
Options under the Plan shall not be transferable by the optionee during the
optionee's lifetime. In the event of termination of employment or cessation as
a director as a result of the optionee's death or disability, to the extent
exercisable on the date employment or directorship terminates, the option shall
remain exercisable for up to one (1) year (but not beyond the end of the
original option term) by the disabled optionee or, in the event of death of the
optionee, by the person or persons to whom rights under the option shall have
passed by will or the laws of descent and distribution. In addition, if an
optionee dies during the three month period referred to below, the option shall
expire one year after the date of such death or the date the option expires
whichever is earlier.
If an optionee's employment is terminated, unless termination was for cause or
if an optionee's directorship is terminated, the optionee shall have the right,
for a three-month period after such termination, to exercise that portion of the
option which was exercisable immediately prior to such termination. If an
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optionee's employment is terminated for cause (which shall include malfeasance
or gross misfeasance in the performance of duties or conviction of a crime
involving moral turpitude), the option shall expire within 30 days of the date
of termination. However, in no event may the option be exercised after the end
of the original option term.
In the event of certain changes in the outstanding Common Stock, such as stock
dividends, stock splits, recapitalization, reclassification, reorganization,
merger, stock consolidation or otherwise, appropriate and proportionate
adjustments shall be made in the number, kind and exercise price of shares
covered by any unexercised options or portions thereof. In the event of a
liquidation of the Company or upon a reorganization, merger or consolidation of
the Company with one or more corporations, the result of which the Company is
not the surviving corporation or the Company becomes a subsidiary of another
corporation, a sale of substantially all of the assets of the Company to another
corporation, or upon a sale representing more than 80% of equity securities
voting power of the Company to any person or entity (any one of which shall be
referred to as a "Terminating Event"), the Plan shall terminate and all options
theretofore granted shall completely vest and become immediately exercisable.
All outstanding options not exercised by the time of the Terminating Event shall
at such time terminate. However, any options not exercised at the time of a
Terminating Event shall not terminate if they have been assumed or substituted
by the successor corporation.
The Board of Directors reserves the right to suspend, amend or terminate the
Plan, and, with the consent of the optionee, make such modifications of the
terms and conditions of his/her option as it deems advisable, except that the
Board of Directors may not, without further approval of a majority of the
shareholders, increase the maximum number of shares covered by the Plan, change
the minimum option price, increase the maximum term of options under the Plan or
permit options to be granted to anyone other than a director, officer or
management level employee.
(the bottom of this page left intentionally blank)
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Participation
As of December 31, 1998 there were a total of 7 Executive Officers and directors
of Bancshares and the Bank participating in the plan. The following table
provides certain information concerning options granted under the Plan to
Bancshares and Bank Executive Officers and directors.
Executive Officer and Director Stock Option Information
All Executive
Officers and
Non-Employee
Robert J. John A. Helen L. Non-Employee Directors as
Youngs Linton Gaulden Directors A Group (1)
Granted:
Jan.to Dec. 31, 1998
Number of Shares 10,000 10,000 5,000 40,000 65,000
Average per share
exercise price $12.50 $12.50 $12.50 $12.50 $12.50
Exercised:
Jan. to Dec. 31, 1998
Net Value realized in
shares (market value 0 0 0 0 0
less any exercise
price) $NA $NA $NA $NA $NA
(2)
Options outstanding at
December 31, 1998
Number of Shares 10,000 10,000 10,000 10,000 10,000
Average per share
exercise price $12,50 $12,50 $12.50 $12.50 $12.50
Potential (unrealized)
value in shares $NA $NA $NA $NA $NA
(Market value less
exercise price)(3)
(1) Includesthree Executive Officers and four directors of Bancshares
and the Bank, a total of 7 persons.
(2) Market Value is as of date the Options were exercised.
(3) Common Stock of Bancshares is listed on NASDAQ as TBLC. Market Value, as
of December 31, 1998 is estimated to be $11.13 per share, based on Bancshares
management's knowledge of a limited number of trades of Bank Common Stock. The
$11.13 Market Value represents the average high and low sales price of known
transactions during December, 1998.
TRANSACTIONS AND RELATIONSHIPS WITH MANAGEMENT
The Company has had in the past, and expects to have in the future, banking
transactions in the ordinary course of business with directors and Executive
Officers on substantially the same terms, including interest rates and
collateral on loans, as those prevailing at the same time for comparable
transactions with other persons; and, in the opinion of management, these
transactions do not and will not involve more than the normal risk of
collectibility or present other unfavorable features.
Extensions of credit outstanding, both direct and indirect, to Bancshares and
Bank directors, their associates and Executive Officers totaled $395,000 at
December 31, 1998. The highest amount of loans to such directors, their
associates and Executive Officers at any one time during the year was $495,000
which represented 6.28% of the Bank's equity capital.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTS
(PROPOSAL 2)
The Board of Directors of Bancshares has selected the Firm of Carlson, Pavlik
and Drageset, Yreka, California as the Company's independent Certified Public
Accountants to examine the financial statements of Bancshares and the Bank for
the year ended December 31, 1999. The firm is to report on the Company's
consolidated balance sheets and related consolidated statements of income,
consolidated statements of cash flow, and consolidated changes in shareholder's
equity and to perform such other appropriate accounting services as may be
required by the Board of Directors.
Carlson, Pavlik and Drageset has advised the Company that neither the accounting
firm nor any of its members or associates has any direct financial interest in
or any connection with Bancshares or the Bank other than as independent public
auditors. It is not expected that representatives of Carlson, Pavlik and
Drageset will be present at the Annual Meeting of Shareholders.
The fee arrangement between Carlson, Pavlik and Drageset and the Company is
based on rates and terms customary in their practice.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE FIRM OF CARLSON, PAVLIK AND
DRAGESET BE RATIFIED AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR THE YEAR ENDED DECEMBER 31, 1999.
PROPOSALS OF SHAREHOLDERS
From time to time, individual shareholders may wish to submit proposals which
they believe should be voted upon by the shareholders. The Securities and
Exchange Commission has adopted regulations which govern the inclusion of such
proposals in Bancshares' annual proxy materials. No such proposals were
submitted for the 1999 Annual Meeting. Shareholder proposals intended to be
presented at the 2000 Annual Meeting of Shareholders must be received by
Bancshares at its executive offices not later than January 12, 2000 (which
is 120 days prior to the expected date of next year's Annual Meeting of
Shareholders) in order to be eligible for inclusion in Bancshares' Proxy Ballot
and Proxy Statement for that annual meeting.
Shareholders may also nominate candidates for director, provided that such
nominations are made in writing and received by Bancshares at its executive
offices not prior to March 12, 2000 nor later than April 20, 2000 (which is 60
and 21 days respectively, prior to the expected date of next year's Annual
Meeting of Shareholders). In accordance with Article 3, Section 16 of
Bancshares' Bylaws, nominations for election of members of the Board of
Directors must meet certain requirements. Nomination may be made by the Board
of Directors or by any shareholder of any outstanding class of capital stock of
Bancshares entitled to vote for the election of directors. Notice of intention
to make any nominations shall be made in writing and shall be delivered or
mailed to the President of Bancshares not less than 21 days nor more than 60
days prior to any meeting of shareholders called for the election of directors.
Such notification shall contain the following information to the extent known to
the notifying shareholder; (a) the name and address of each proposed nominee,
(b) the principal occupation of each proposed nominee, (c) the number of shares
of capital stock of Bancshares owned by each proposed nominee, (d) the name and
residence address of the notifying shareholder, and (e) the number of shares of
capital stock of Bancshares owned by the notifying shareholder. Nominations
not made in accordance with these provisions may, in the discretion of the
chairman of the meeting, be disregarded and upon the chairman's instructions,
the inspectors of the election can disregard all votes cast for each such
nominee.
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ACTION WITH REGARD TO REPORTS
Action taken at the 1999 Annual Meeting to approve the minutes of the last
Annual Meeting does not constitute approval or disapproval of any of the matters
referred to in such minutes.
OTHER BUSINESS
Management of Bancshares knows of no other business to be presented at the
Annual Meeting. If other matters should properly come before the Annual Meeting
or any adjournment thereof, a vote may be cast pursuant to the accompanying
Proxy in accordance with the judgement of the person or persons voting the same.
By Order of the Board of Directors
Richard S. Day
Secretary
Yreka, California
Dated: April 9, 1999
